HHS has announced that about 2000 companies, unions, and government entities have been approved to receive a portion of the $5 billion early retiree reinsurance fund created by the health care reform bill. According to the announcement, HHS “has received applications from more than 50 percent of Fortune 500 companies, all major unions, and government entities in all 50 States and the District of Columbia.”  HHS continues to review applications and will announce more grants as they are approved. You can use an interactive map on the page linked to in this post to see a list of the organizations that have been approved for funding in each state.

To eliminate confusion and simplify Medicare Part D plan coverage, the Centers for Medicare & Medicaid Services (CMS) has mandated that there must be a “meaningful difference” between plans, defined as an actuarial estimate of a member’s out-of-pocket cost share between each plan offered.  Most carriers today offer a “low,” “medium,” and a “high” Part D plan within each market. As a result of this new rule, in most cases the number of plans in a specific geography will be reduced to two. Read the rest of this entry »

This is the second post written for Extend Health by Avalere. We asked them to take a look at the changes made by the reform legislation to the Retiree Drug Subsidy, and the potential impact to both retirees and their employer sponsors.

Health Reform and the Changes to the Retiree Drug Subsidy: Potential Implications for Seniors

The Patient Protection and Affordable Care Act (ACA) makes several changes that will affect drug coverage for retirees.  Specifically, you may have heard about changes to the Retiree Drug Subsidy (RDS) and wondered what they might mean for your company’s retiree benefits. 

The RDS was part of the Medicare Modernization Act (MMA), which Congress passed in 2003.  It is a tax-free Medicare payment to employer-sponsored plans, worth 28 percent of allowable drug costs between $310 and $6,300 for each covered retiree not enrolled in Medicare Part D in 2010.  RDS payments were excluded from the employer’s gross income for the purposes of corporate income tax, and employers were also allowed to claim a business deduction for retiree prescription drug expenses even though they also received the federal subsidy to cover a portion of those expenses. 

The ACA changes the tax treatment of the RDS beginning in 2013.  Rather than receiving both the subsidy and the tax deduction for retiree prescription drug coverage, the amount allowable as a deduction will be reduced by the amount of the federal subsidy received.  Some employers may choose to eliminate their retiree drug coverage in response to this change.  However, the impact of these changes may be limited since a significant portion of RDS-covered retirees belong to groups that are exempt from federal taxes, such as state and local governments and non-profits.  Read the rest of this entry »

If you haven’t seen it already, the National Business Group on Health has just released results of its latest polling on health care benefit trends among large employers. One of the most interesting findings: a majority of employers (61%) will offer a consumer-directed health care plan (CDHP) in 2011. More and more employers are looking at CDHP strategies as a way to hold down their health care benefit costs. At Extend Health, we know it works because we’ve seen our clients reduce their health care spending, administrative costs, and long-term OPEB liabilities for retiree benefits by transitioning their Medicare-eligible retirees to individual Medicare accounts subsidized by HRA accounts.

The full survey is available for download here.

We’ve just published the results of our latest survey of retirees. This time we asked them about their experience using a Medicare exchange and we were happy to hear that a large majority were positive. When asked the most appealing aspect of health insurance exchanges, the number one cited answer was “Exchanges make it easier to compare and select plans that meet my needs and budget.” Full survey results can be found by following the link in this post.

Donald Berwick, recently appointed Medicare head, announced this week that the most recent evaluation of the effect of the reform legislation on Medicare shows “the financial outlook for Medicare is substantially improved.” Lots of folks weighed in on the announcement, and here’s a quick roundup of stories: Read the rest of this entry »

A couple of new articles came out this week, and both highlight how using a Medicare exchange lets employers continue to offer their retirees health care benefits, while keeping the costs sustainable.

Private exchanges have potential to breathe new life into VEBAs”  in Employee Benefit News features interviews with  former Congressional Majority Leader Dick Gephardt and Caterpillar retiree George Farnall.

How to Stay in the Retiree-Benefit Game” on CFO.com focuses on the cost savings employers can achieve when they move retired employees from group Medicare plans to individual plans paid for with HRA funds, and includes an interview with Phil Belcher from Eastman Chemical.

Check ’em out!